Investment update

Weekly insight into the marketplace.

July 14 to July 18, 2025

Markets hit record highs

The major U.S. stock indexes hovered near record highs on Monday following U.S. President Donald Trump’s announcement that he intended to impose 30% tariffs on goods from Mexico and the European Union, effective August 1. The S&P 500 edged up 0.1%, the Dow added 0.2%, and the Nasdaq climbed 0.3% to close at a record high. Canada’s TSX also hit a record high on Monday, climbing 0.7% with tech stocks leading broad-based gains. Of the 10 major sectors that comprise the TSX, only energy fell, losing 0.2%. The TSX pulled back on Tuesday after domestic inflation data for June came in hotter than expected, reducing the odds of a Bank of Canada interest-rate cut on July 30. Stocks finished higher Wednesday, bouncing back from morning losses that followed a New York Times report that President Trump was preparing to fire Fed Chair Jerome Powell. The Dow rose 0.5%, while the S&P 500 and the Nasdaq each added 0.3%. Speaking to reporters after the report, Trump said it was "highly unlikely" that he would fire Powell. The TSX closed higher on Wednesday, propelled by gains in the tech sector, and hit another record high on Thursday, aided by financial and technology shares. The S&P 500 and the Nasdaq Composite also closed at record highs on Thursday, with investor sentiment boosted by U.S. retail sales data that rebounded more than expected in June. Momentum stalled on Friday as investors absorbed positive U.S. consumer sentiment data that is likely to support an interest-rate pause. The TSX, S&P 500 and the Dow all declined for the day but were positive on a weekly basis. The Nasdaq eked out a 0.1% daily gain to clinch another record and fifth-consecutive positive close.

Canadian and U.S. inflation rose in June

Inflation data for both countries came out on Tuesday. The reports indicated that tariffs – and concern for the future of trade policy – were spurring the return of above-target inflation. Statistics Canada’s Consumer Price Index (CPI) accelerated 1.9% on a year-over-year basis in June, up from 1.7% in May. Headline inflation increased at a quicker pace than core inflation (which excludes volatile food and energy prices) with the price for gasoline declining less in June (-13.4%) than it did in May (-15.5%). The Bank of Canada’s preferred inflation indicators, CPI Trim and CPI Median, rose 0.2% and 0.3% month-over-month, respectively. The annual Trim rate stayed at 3.0%, while the Median rose to 3.1%. In June, prices for durable goods jumped 2.7% (up from 2% in May), passenger vehicle prices climbed 4.1% (up from 3.2% in May) and clothing and footwear increased 2% (up from 0.5% in May). On the other hand, grocery prices fell, rising only 2.8% in June versus 3.3% in May. A 3.1% decline for fresh vegetables drove those results. In the U.S., Bureau of Labor Statistics CPI data showed a 2.7% year-over-year increase in June, up from 2.4% in May. Core inflation rose 2.9% compared to May’s 2.8% pace. All told, the June data supported economist and policy-maker expectations that businesses would start passing the brunt of tariff costs on to consumers. This is the last CPI reading before the next interest-rate decision for the central banks in both countries. The Bank of Canada and the U.S. Federal Reserve are widely expected to hold rates.

Market rallies boosted investment bank earnings

Some of the most prominent names in the investment banking sector reported second-quarter corporate earnings last week, and a common factor drove results. With markets swinging from steep losses in April to record highs in late June, Citigroup, Morgan Stanley, Goldman Sachs and Bank of America all reported better-than-expected revenue that benefitted from high trading volumes and wealth management fees. Citigroup’s net income climbed 25% from the same quarter last year to reach US$4.02 billion. The company reported that total market-related revenue rose 16%. Bank of America announced a profit of US$7.1 billion compared with US$6.9 billion last year, with a 15% increase in sales and trading revenue. Morgan Stanley’s profit also beat Wall Street’s forecast with a net income of US$3.5 billion. Revenue from its wealth management operations pulled in US$7.8 billion versus US$6.8 billion last year. Earnings at Goldman Sachs surged 22% to US$3.7 billion in Q2, supported by a 26% jump for its investment banking fees.